National City to get $6-Billion from Private Invetsors

National City Corp. will get about $6 billion from private investors in a deal that provides much-needed capital to a Midwestern bank heavily exposed to the worsening mortgage and housing market, according to reports published Sunday

AP
Reports: National City to get $6B from private investors
Sunday April 20, 9:31 pm ET

Reports: National City to get $6B from private investors amid mortgage crisis

CLEVELAND (AP) -- National City Corp. will get about $6 billion from private investors in a deal that provides much-needed capital to a Midwestern bank heavily exposed to the worsening mortgage and housing market, according to reports published Sunday.

National City officials were negotiating final terms of the transaction with a group of investors led by Corsair Capital LLC, a New York private equity group, The Wall Street Journal and The Plain Dealer reported on their Web sites, citing sources they didn't identify.

The parties were aiming to seal the deal by Monday, the Journal said. National City is scheduled to report first-quarter results Tuesday.

National City spokeswoman Kelly Wagner Amen declined to comment to The Associated Press on the newspaper reports. A message seeking comment was left with Corsair chairman Nicholas Paumgarten.

Cleveland-based National City is Ohio's biggest financial institution, with assets of $150 billion. But the mortgage crisis has left it with troubled assets, and its stock has plunged to multiyear lows.

Like Washington Mutual Inc. and Wachovia Corp., which also got huge cash infusions this month, National City is offering its financial rescuers shares at prices substantially below the prevailing market price, while diluting the holdings of existing shareholders, the Journal reported.

The plan calls for the investors to pay about $5 a share, the Journal said. Corsair will hold a 9.9 percent stake in National City. Corsair partner Richard Thornburgh is expected to join the bank's board, but National City's top management will remain in place.

Amid its struggles, National City on April 1 hired New York investment bank Goldman Sachs to look at options, including a possible sale, analysts said at the time.

Numerous banks considered buying National City but backed away without bidding, the Journal said. They included Cleveland-based KeyCorp, Cincinnati-based Fifth Third Bancorp and Toronto-based Bank of Nova Scotia, Canada's third-largest bank by stock-market value.

National City shares fell 16 cents to $8.33 at the end of trading Friday. The shares have traded within a one-year range of $6.56 and $38.32.

National City operates about 1,400 bank branches in Ohio, Illinois, Indiana, Kentucky, Michigan, Missouri, Wisconsin, Pennsylvania and Florida.

AP Wire